Which of the Following Factors Most Likely Would Lead a CPA

question 858

Multiple Choice

Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement should not be accepted?

• A) There are significant related party transactions that management claims occurred in the ordinary course of business.
• B) Internal control activities requiring the segregation of duties are subject to management override.
• C) Management continues to employ an inefficient system of information technology to record financial transactions.
• D) It is unlikely that sufficient appropriate audit evidence is available to support an opinion on the financial statements.

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Definitions:

Autarky

An economic system where a region or country is self-sufficient and has no trade with the outside world.

Specialization

The situation in which each person specializes in the task that he or she is good at performing.

Absolute Advantage

The ability of an individual or economy to produce a good or service more efficiently than competitors using the same amount of resources.

Cars

Motor vehicles with four wheels designed primarily for passenger transportation and commonly powered by internal combustion engines.